Thailand Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Thailand might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Thailand including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.
What are the Employee Benefits in Thailand?
Benefits and entitlements in Thailand are generally covered by the Civil and Commercial Code, the Employment Protection Act, and the Employment Relations Act. Collective Bargaining Agreements as recognized in most employment markets do not generally apply in Thailand. Their equivalent – ‘agreements relating to conditions of employment’ – operate at workplace level where there are more than 10 employees.
Foreign companies hiring employees in Thailand must operate within this complex framework of legislation, which provides safeguards and guarantees for the workforce. Minimum guarantees include:
- Minimum wages
- Paid vacations
- Working hours
- Termination, severance, and notice periods
- Sick leave
- Maternity allowances and benefits
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Thailand?
The obligations of employers and rights of employees are covered in general by the Civil and Commercial Code, the Employment Protection Act, and the Employment Relations Act. Additionally, other Acts or Royal Decrees can apply specific regulations.
These include the Gender Equality Act, Foreigners Working Management Decree, Personal Data Protection Act, Alien Working Act, Employment and Job-seeker Protection Act, the Occupational Safety, Health and Environment Act, Provident Fund Act, Social Security Act, State Enterprise Labor Relations Act, and the Workmen’s Compensation Act.
Legislation protects employees regarding minimum wages, paid vacations; working hours; termination, severance, and notice periods; sick leave; maternity and paternity allowances and benefits.
In Thailand it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties for ignoring these responsibilities!
Compensation, entitlements, and benefits include the following:
- National Minimum Wage: Thailand’s 77 provinces set their own minimum wage levels as there is no national minimum. The lowest daily rate is THB 313 (€8.30, US$9.50) in Narathiway, Pattani and Yala, up to THB 336 (€8.90, US$10.20) in Chonburi and the tourist hot spot of Phuket. The minimum hourly wage in the capital, Bangkok, is THB 331 (€8.77, US$10.0). Minimum wages are also set for foreigners when they apply and renew their visa to comply with regulations of the Thai Immigration Bureau. Rates vary between nationalities and the bureau requires PND1 forms from the previous three months, confirming salaries.
- Sick Leave and Benefit: Employees are entitled to 30 days sick leave annually, paid by their employer, who can request a medical certificate if leave exceeds three days. If sickness exceeds 30 days and is not due to occupational illness or workplace accident, employees claim benefit from the authorities at 50% of the (capped) monthly wage to a maximum 90 days for each treatment or 180 days annually. In the case of chronic disease, this benefit can be for one year. The Workers’ Compensation Fund pays up to 60% of the monthly wage (capped) in the case of workplace injuries or occupational disease. Employers can recoup employees’ medical expenses from the fund.
- Working Hours and Breaks: The Labor Protection Act’s ‘Hours of Work’ regulations and the Ministry of Labor stipulate working hour limits, which must be covered contractually or by a workplace agreement. Daily working hours are generally eight over a five-day period, not exceeding 48 in a week. If employment has health and safety issues, hours worked cannot exceed seven a day or 42 per week. Amendments to the Act allow other limits depending on the type of role. Employees receive one hour’s break for working five consecutive hours unless there is an employer-employee agreement for less. Breaks are not paid as working time. Employees are entitled to an extra 20-minute break before starting overtime, plus 20 minutes if overtime is for two hours. Employees have a minimum one day’s rest day per week and the gap between days off must not exceed six days. This may not apply in such industries as tourism, but employees can accumulate rest days, which must be used within four weeks.
- Overtime: The Employment Protection Act states that overtime on a normal workday is paid at not less than 150% of the normal hourly rate. Employees working on a holiday must be paid twice the normal hourly rate, and three times the normal rate for working overtime on a holiday. The same rates apply to piece work as per quantity produced. Overtime and hours worked on holidays cannot exceed 36 in a week.
- Paid Vacations: Employees earn six days’ paid vacation after one year’s service, with the allowance adjusted pro rata for working less than one year. It is up to employers whether to allow extra days of vacation in subsequent years. Employers and workers can agree for unused holiday entitlement to be accrued and used the following year.
- Maternity / Paternity Leave and Benefit: The Labor Protection Act provides maternity leave up to a maximum 98 days, which generally begins with the birth of the child. Pre-natal leave requires a doctor’s certificate. The employee receives full pay from their employer for the first 45 days. Employees insured under the Thai Social Security Fund may qualify for other benefits, depending on circumstances. These options apply only to the first two births – when the child is born a lump sum payment of THB 13,000 (€346, US$395) is made or 50% of wages for the 98 days capped at THB 15,000 (€400, US$456). There is no provision in Thailand for paternity leave.
- Termination and Severance: Either party can terminate a contract. Employers give ‘advance notice’ in writing of their intention, generally before wages are due, to then take effect before the next wages due date. Employers terminating with immediate effect must pay the employee in lieu of the advance notice period unless dismissal is due to serious misconduct. Employees’ statutory severance pay is calculated on their length of service with the company, as follows: 120 days up to one year – 30 days’ basic salary minimum; one year up to three years – 90 days’ basic pay minimum; three years up to six years – minimum 180 days’ basic pay; six years up to 10 years – at least 240 days’ basic pay; 10 years up to 20 years – 300 days’ basic salary; more than 20 years’ service – at least 400 days’ basic pay. The Social Security Office must be notified of terminations. Severance is not paid if dismissal is for serious misconduct. If a foreign employee is dismissed the employer must inform the Department of Employment of the Ministry of Labor and the Immigration Bureau.
- Notice Periods: Notice periods generally match the employee’s payment period, i.e., one month’s notice when an employee is paid monthly. The maximum notice period is three months, regardless of the pay period. The employer must comply with the employee’s contract if it stipulates a longer notice period.